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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: S/SHRI B.R.BASKARAN & AMARJIT SINGH
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 10.09.2014 passed by the learned Commissioner of Income Tax (Appeals)-14, Mumbai [hereinafter referred to as the learned “CIT(A)”] relevant to the assessment year 2011-12. ITA No.7089/Mum/14 A.Y. 2011-12
The revenue has taken following grounds challenging the order dated 10.09.2014:-
“1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made u/s 201(1)/201(1A) of the IT Act, holding that no TDS was deductible u/s 194H by the assessee company on the amount held by the banks/credit card agencies as service charges in respect of credit card services provided ignoring the fact that in the entire process of facilitation of credit card, the bank is nothing but a constructive agent for the assessee company
On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in failing to appreciate the real and true nature of the relationship between the assessee company and bank/credit card agencies.
On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in failing to appreciate that in substance and in fact relationship between the assessee company and bank/credit card agencies was in the nature of principal and agents relationship and therefore, the Ld.CIT(A) erred in not upholding the AO’s conclusion of bringing the charges charged to the assessee company by the bank/credit card agencies within the purview of section 194H of the I.T.Act,1961.”
In brief the revenue has solitary grievance with regard to the decision of learned CIT(A) in deleting the addition to the tune of Rs.11,06,421/- made by the Assessing Officer by invoking the provision made under section 40(a)(ia) of the Income Tax Act, 1961 A.Y. 2011-12
( in short “the Act”). The facts of the case are that the respondent assessee is a company incorporated under the provision of Companies Act 1956 and is inter-alia, engaged in the business of setting up and running of 5-star deluxe hotels. During the course of assessment proceedings, the Assessing Officer noticed that the assessee did not deduct tax at source under section 194H of the Act in relation commission paid to the banks on processing of credit card transactions. As a consequence, the Assessing Officer disallowed the corresponding expenditure of Rs.11,06,421/- by invoking provisions of section 40(a)(ia) of the Act. The learned CIT(A) has since deleted the addition by holding that the commission paid to the banks for processing of credit card payments does not fall within the purview of tax deduction at source under section 194H of the Act. Thus the revenue has filed the appeal against the decision of learned CIT(A) with regard to the deletion of said expenditure.
We have heard the arguments advanced by the learned representative of the parties and perused the records carefully. At the very outset the representative of the department has argued that the learned CIT(A) is wrong in deletion of the addition to the tune of Rs.11,06,421/- made by the Assessing Officer by invoking provisions of section 40(a)(ia) of the Act. It is also argued that the tax at source is liable to be deductable on the amount paid to the bank on processing of credit card transaction in view of provision of 194H but A.Y. 2011-12
the learned CIT(A) has taken the decision wrongly therefore the order dated 10.09.2014 is wrong against law and facts and is liable to be set aside. On the other hand learned representative of the assessee has refuted the said contentions and argued that the matter of controversy has already been adjudicated by the Mumbai bench in the assessee’s own case in ITA No. 150/Mum/2014 titled as Dy. Commissioner of Income Tax (O ) 8 (2) Vs. M/s. Hotel Leelaventures Ltd. for the A.Y. 2010-11 and in ITA No. 2703/Mum/2013 titled as Dy. Commissioner of Income Tax Vs. Hotel Leelaventure Ltd. for the A.Y. 2009-10. Therefore, the learned CIT(A) has passed the order dated 10.09.2014 rightly and correctly which does not required to be interfered with in accordance with law. The order of learned CIT(A) dated 10.09.2014 perused which has been passed on the basis of order passed by the Hon’ble Income Tax Appellate Tribunal, Mumbai bench in case of M/s. Jet Airways (India) Ltd. in ITA Nos. 7439, 7440 & 7441/M/2010 dated 17.07.2013 for A.Y. 2007-08, 2008-09 & 2009-10. Subsequently, in the assessee’s own case in ITA No. 150/Mum/2014 titled as Dy. Commissioner of Income Tax (O ) 8 (2) Vs. M/s. Hotel Leelaventures Ltd. for the A.Y. 2010-11 and in ITA No. 2703/Mum/2013 titled as Dy. Commissioner of Income Tax Vs. Hotel Leelaventure Ltd. for the A.Y. 2009-10. The said orders were passed on the basis of judgment passed by the Hon’ble Delhi High Court in case of CIT Vs. JDS Apparels Pvt. Ltd. [2015] 370 ITR 454 (Delhi). It has been squarely held that the payment of A.Y. 2011-12
commission to the bank with regard to the processing of credit card transactions was not liable to be considered as commission with the meaning of section 194H of the Act. It has also been held that the bank did not act as an agent of the assessee while processing the credit card payments and a charge collected by the bank for such services does not amount to commission within the meaning of section 194H of the Act.
Therefore, in view of the said circumstances and by honouring the order passed by the co-ordinate bench of Mumbai, we are of the view that learned CIT(A) has passed the order dated 10.09.2014 judiciously and correctly which does not require to be interfered with at the appellate stage.
Accordingly the appeal filed by the revenue is hereby dismissed.
Order pronounced in the open court on 10th February, 2016. (AMARJIT SINGH) (B.R.BASKARAN) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 10th February, 2016 MP MP MP MP A.Y. 2011-12
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- 4. आयकर आयु"त / CIT
"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त //// उप/सहायक पंजीकार /(Dy./Asstt.